COMMISSIONER OF INCOME TAX Vs. PARAMANAND UTTAMCHAND

JUDGEMENT

(1.) THE respondent before us in an individual called Paramanand Uttamchand. He is a married man with a family. He purchased a two-ground plot in Kilpauk Garden and constructed a building on it for his family residence. Before moving in, he performed a Grahapravesam. He received, on that occasion, a number of presents from relations, friends and well wishers. THE case now before us is about those presents. For all but a few of the presents came to be charged to income-tax as income. THE respondent questioned the assessment in appeal. He complained that he was being taxed, not only any income which was taxable under the I.T. Act, but on gifts received by him which were outside the concern of that Act. THE AAC agreed with this position and deleted the amount assessee. THE Department did not accept this order as correct. THEy appealed to the Tribunal for restoration of the assessment. But the Tribunal dismissed the departmental appeal. On being moved by the Department, however, the Tribunal stated a case referring the following question of law for our decision :

(2.) BEFORE us, the Department's endeavour was to sustain their stand that the presents which were received at the Grahapravesam were taxable income in the assessee's hands.

(3.) MR. Jayaraman, learned standing counsel for the Department, read a thread of principle as runing right though all these cases. He submitted that the inquiry in a matter of this kind is to search for an answer as between two alternatives : Is it a receipt from the business ? or, is it a gift ? If it is the one, it cannot be the other. He cited a relevant passage from a judgment of the English Court of Appeal in the well-known professional cricketer's case of Moorhouse v. Dooland [1955] 28 ITR 86 at. 96. Learned counsel submitted that s. 10(ii) of our I.T. Act, 1961, directs pretty much the same inquiry. The section, he said, excepts from the charge to Income-tax casual receipts of a taxpayer only where such receipts do not arise from the taxpayer's employment, calling, profession, vocation or trading. This express provision in the statute, it was said, is in line with the principles decided in the reported cases.